| > These would be demand deposits paying zero interest (not that they're paying much more than that today :)? Yes. In fact, you would probably have to pay for the services around them, as with a safe-deposit box, so in some sense they would have negative interest. That's the price of being able to demand the money at any point. Banks would compete on the lowest price for this (and likely pass the cost through to point-of-sale surcharges.) The core point is that the banks cannot commit fraud: they cannot tell all of us that we can have our money at any point and then not be able to deliver. > "duration matching" sounds like those deposits are participants in the loan (e.g. share the risk)? The idea is that banks can make profits on loans, but not by introducing double-counting of money at a given time-point, which is what they do now. (This is why bank runs are possible.) The participants still share default risk, which is hopefully covered by collateralization. If a bank fails to deliver on a given payment, they go into default like a normal business, and they have to strictly demonstrate that they can meet all time-dollar commitments without double-counting any money. Profits are earned via excess interest and I would imagine that well run banks would maintain a positive reserve on top of their commitment curve. > "citizens dividend for economic stimulus" not sure about this one? The government issues debt-free money or takes cash-flow from public entities like utilities and distributes it directly to the citizens. This serves as a way to broadly distribute monetary expansion, rather than putting money into the financial system or to favored constituents, with the attendant early-reciever and corruption problems. It's not a system without flaws and it would be gut-wrenching to move to it. However it does have the advantage that it will never be implemented, so I will never be proven wrong. Perfect! ;) |